The Extraordinary General Assembly of the Water Consortium unanimously approved this morning to initiate the procedure for the resolution of the concession contract to Canal Gestión Lanzarote for the water supply, sanitation and reuse services of the islands of Lanzarote and La Graciosa.
The unity and coherence of the members of the Water Consortium, mayors of the island's municipalities, supported by the report issued by the contract manager, led to the unanimous vote to initiate the resolution procedure, despite the attempted coercion by Canal Gestión to the members of the Consortium by sending them a burofax, addressed personally to each of them, in an attempt to usurp the decision-making capacity of its members.
At the beginning of the assembly, the mayors present opened the burofax that was sent to them, the content of which did not affect the considered decision they intended to adopt. Rather, it translated into a show of weakness by Canal Gestión Lanzarote and an impulse to the unity of the representatives of the local and island administrations that make up the Water Consortium of Lanzarote, who mostly described the content of the letter as "blackmail", in which the breach of contract was denied and the responsibility for the situation of the service was transferred to the Consortium itself.
The General Assembly also approved by majority, with the votes against of the Town Halls of Tías, San Bartolomé and Haría, and the abstention of Yaiza, the initiation of a procedure for the award of a new contract, conditional on the termination of the resolution file (according to article 213.6 of the Public Sector Contracts Law (LCSP).
Regarding this point and the refusal of the socialist mayors to approve it, the president of the Cabildo, Oswaldo Betancort, wanted to clarify that "the opening of the procedure for a new contract does not mean that the water management will be outsourced again, but the Consortium cannot stop, we have a deadline of 8 months and we must have all the options prepared, not ruling out either public management or the creation of a mixed public-private company. This has not yet been decided".
Betancort added that "we could not stand idly by watching how the water supply service deteriorated, and that is why we have been working for more than a year to prepare a thorough and detailed legal report to terminate the contract with Canal Gestión. A report that has been prepared after looking one by one at the invoices and investments of Canal Gestión. It has not been an easy task and that is why I want to congratulate the entire legal and technical team of the Consortium, and of course the councilor Domingo Cejas for this ant-like work for which they have not had precisely the collaboration of the concessionaire".
The legal report of the technician in charge of the Canal Gestión contract concludes that the breaches of the concessionaire are of such gravity that they lead to the resolution of the contract for having violated essential obligations of the contractual agreement.
The Public Sector Contracts Law (LCSP) stipulates a maximum period of 8 months for the final resolution of the contract. The General Assembly of the Consortium also approved a period of 10 working days for Canal Gestión to present allegations or documentation on the file, and subsequently, once they have been analyzed, the Consortium will make a proposal for a definitive resolution that will be sent to the Canary Islands Advisory Council to issue an opinion that is mandatory, but not binding.
The Minister of Water, Domingo Cejas, has also highlighted "the enormous effort made by his team at the Consortium and the meticulous report drafted by the contract manager which, supported by the documents and technical reports prepared in the last year, is based on management audits, reports on leak control, audits of processes in treatment plants, reports on the maintenance and operation of the facilities and, in particular, on the reports on the degree of compliance with the investment commitment presented by Canal Gestión".
An under investment of 21 million euros
Among the serious breaches that motivate the resolution of the contract, the main objective of the contractual agreement stands out: to reduce losses to 30% after the first 5 years of the contract (in 2018). The Exploitation Plan has therefore been breached, the report points out, which has led to water losses being higher than 56 percent, far from the required objective.
The report reveals that Canal Gestión Lanzarote, in relation to the development of the investment program committed in its offer for an amount of €54,455,128.00, has executed justified actions that have involved an investment worth €32,633,088.09, leaving an under investment that has not been justified for an amount of €21,822,039.91.
The report of the person in charge of the contract with Canal Gestión also states that the unilateral modification of investments and execution of works not contemplated in the investment offer has been carried out, and that the exploitation plan offered by Canal itself has not been complied with, which is reflected by the inaction for the detection of leaks, which would have contributed decisively to the reduction of losses in the network.
In the list of breaches, the report also points to the obligation to settle the variable fee (Canon C) for applied tax deductions, estimating the debt at 833,000 euros, and the obligation to provide the service continuously, which is reflected in the continuous, numerous and repeated supply cuts to entire population centers.
The obligation not to subcontract the services that are inherent to the concessionaire, the obligation to provide information at the request of the Consortium, as well as the presentation of the documents with the annual reports of the services performed, are also breached.
